SHANGHAI (BLOOMBERG) - China's securities regulator on Tuesday (Jan 20) allowed seven companies to sell initial public offering shares after the country introduced a new system of bidding for IPO stocks this year.

Three companies including Eastern Pioneer Driving School, Southern Publishing & Media and Top Score Fashion Shoes were approved for a listing in Shanghai, according to a statement posted on the website of the China Securities Regulatory Commission. Four other companies were permitted for an IPO in Shenzhen.

The CSRC said last month it will scrap the upfront payment rule for IPOs in 2016, a requirement that had been wreaking havoc on liquidity conditions in the nation's financial system. Nearly every time a new batch of companies took orders over the past year, money-market rates climbed and the Shanghai Composite Index slumped as investors hoarded cash for their bids.

The regulator also said it will push ahead with a new market-based IPO registration system this year. The new regime would leave the questions of IPO supply and timing to companies and the market, rather than regulators, and give companies more power to determine pricing.

The CSRC previously pressured companies to set debut prices at below-average valuations in an effort to protect small investors. The perception that IPOs are riskless has encouraged some investors to use borrowed money, exposing them to deeper losses once prices stop climbing.

The seven companies allowed to sell shares on Tuesday will arrange the offerings before Chinese New Year holidays, which falls in February, the statement said.